Law Business

I attended a presentation to a room full of business owners the other day. The presenters were professionals who operate in trusted advisor roles. The topic was improving the value of your business by making yourself less indispensable.

An interesting part of the event was a discussion during the Q&A following the presentation. Someone mentioned the frustration of receiving financial statements from a CPA without commentary. What benefit to the business owner is the information without context, without direction, without advice?

If a business hires a CPA to prepare financial statements, and the CPA delivers financial statements, she’s done her job, right? Maybe. Or maybe not. The consensus in the room was that CPAs who do so aren’t doing their whole job, or at a minimum are letting the opportunity for providing additional value–maybe for additional fees–slip away.

Law firm business models are under a lot of pressure. And this has been true for quite some time. When I was a young lawyer at a regional corporate firm, I would go to the office early in the morning, leave in the evening, and bill almost every minute in between. And clients would pay for all that time. But it’s increasingly difficult to get clients to oblige.

Companies have long complained about the ever-increasing hourly rates charged for legal work. And during the recession in the late 2000’s, they began to push back on rates in a big way. They also started pulling more of their work in-house. Companies were able to do more of their own legal work because there was simply less to do during the recession. Plus their in-house lawyers were willing to work extra hard in light of market turmoil and job insecurity. Then, when business began to pick up and corporate legal departments once again needed help with overflow, they simply hired new lawyers rather than sending the work to their outside firms.

As a private attorney who’s responsible for bringing in new business, I often think about why businesses need to hire an attorney to help with their contracts. Here are some thoughts about how I view my role in business transactions.

Not all law practices are alike, but I usually operate in one of two contexts: either I’m dealing with a senior business executive (usually the CEO or the owner) of a company that doesn’t have in-house counsel, or I’m basically doing overflow work from the general counsel’s office of a largish corporation. In those cases, I’m usually dealing with someone in the sales division of the company on each contract, although I’m hired by the general counsel or another senior attorney.

I announced Wednesday that I’m launching Blue Maven Law, LLC, a boutique law firm that will focus exclusively on small business mergers and acquisitions, while remaining with Evans & Dixon, L.L.C.

This post explains why I decided to start my own firm and what I hope to accomplish.

It’s no secret that the legal services industry is undergoing significant changes. The prevailing law firm model is under tremendous pressure: A number of well-known firms have folded. Experienced and effective lawyers have found themselves out of a job and looking for work. Equity partners have been de-equitized. Non-equity partners and associates have been fired. Secretarial ranks have been thinned. This is the result of the recent deep recession; it’s also the result of business reality forcing itself upon a reluctant profession.

If you’re interested in the business of law, your life is incomplete unless you’ve read Bruce MacEwen’s “Growth Is Dead Series” on the Adam Smith, Esq. blog. Here’s a link to the first post, Growth Is Dead: Part 1-Setting the Stage, in which MacEwen discusses the performance of the legal services industry from the beginning of the economic downturn until now, as well as the pressures currently faced by law firms.

The Growth Is Dead series takes what many of us vaguely think and feel about the current state of things and explains it brilliantly and with clarity.

In a post mid-way through the series, Growth Is Dead: Part 4-Economies I & II, MacEwen takes David Brook’s concept of two co-existing economies — one in which companies face intense global competition and the other in which companies do not — to describe what the legal services industry (and BigLaw in particular) has been experiencing since the latter part of 2008. [click to continue…]

In our recent discussion on his blog about the appropriate cost of legal documents for startups (which he argues is zero), Bill Carleton posed an interesting question about the role of lawyers in the early lives of startups.

Bill reasons in his post that startups are in a somewhat unique situation — at least compared to businesses in other contexts requiring legal services, such as acquisitions — because their legal needs are standard. According to Bill, “[E]ntrepreneurs do not want the relevant legal documents – charter, bylaws, stock subscriptions, assignments of invention – to be unique or to feel customized. They want them to read like everyone else’s.”

In fact, this attitude reflects a general “ecosystem of efficiency.” Commenting on the role of lawyers, Bill states that “lawyers need to participate in that ecosystem of efficiency; if they do not, entrepreneurs and the ecosystem will find ways to bypass them.” Then he asks “Is a startup ecosystem without lawyers a good thing or a bad thing?”

I’ve had some interesting interwebs conversations about the law business, including one on my blog that included this comment from Ken Adams: “As I read the closing two paragraphs of your post, the final words of The Count of Monte Cristo came to mind: ‘Wait and hope.’ Not a particularly promising sentiment when it comes to law practice!” Here are the last two paragraphs he was talking about:

A business dependent on the intellect of its workforce ought to invest heavily in talent management and leadership development. This includes understanding employee needs and putting in place policies and operating principles that maximize engagement.

Bill Carleton wrote a piece last week about law firm Gunderson Dettmer making form agreements available on Docracy’s website. In case you haven’t heard of Docracy, here’s how the web company describes itself:

Docracy is a social repository of legal documents. Our mission is to make useful legal documents freely available to the public. We also hope to make them easier to find, customize and sign. No more crappy templates behind a paywall that you download hoping everything will be alright. Instead: reputable, transparent sources and social proof to help you find something as close as possible to the perfect document.

There’s such a good discussion bouncing around a few law blogs that I couldn’t resist a quick post on a non-contracts topic. Toby Brown, one of the “geeks” at 3 Geeks and a Law Blog, and Ron Friedmann, the writer of the Strategic Legal Technology blog, started the discussion Tuesday with this post, which appears on both blogs. Mary Abraham chimed in with this post at the Above and Beyond KM blog, and Stephen B. Levy contributed to the discussion with this post at the Lexician blog. More good discussion is sure to come.